Despite the ongoing increase in focus on purchase-to-pay (P2P) processes, there are still a large number of organizations who are reluctant to automate, let alone optimize, these business activities. Indeed, it’s almost strange that the P2P process has flown under the radar for so long, when it’s so well suited to automation and significant improvements in speed and accuracy.
What is P2P?
The Purchase to pay cycle, as the name suggests, involves the whole process around an organization’s buying in of goods and services. This usually begins with a purchase or order request from an employee, followed up by an approval step issued from team lead, manager or other budget holder. After a purchaser or procurement officer has placed an order, the goods will be received at the warehouse, or service performed with a declaration to follow. The purchase invoice eventually follows at the administration, which, once everything has been confirmed as correct, can be paid.
It’s a simple enough cycle on which to focus attention and drive improvements, but more often than not, other business processes seem to win the fight for attention. Most businesses have ERP support from horizontal processes like HRM, CRM and the financial administration, with industry specific solutions for trade, manufacturing, building or services operations also readily accessible. For a great many businesses though, the purchasing process remains out of scope for their IT infrastructure, despite its relatively unstructured and often chaotic existence.
A successfully implemented P2P process can offer a business a host of benefits. And the implementation can also be relatively simple, not necessarily involving long or complex procedures. And as you’ll see below and in the rest of this series, there are a number of key reasons why all businesses should seriously consider exploring purchase automation.
A simple, digital work process for daily use
How refreshing would it be if every employee in the organization could request and then order a product or service for the company in the same way, and then track the progress within one company-wide system? Or better still, if the employee could be empowered to initiate all their purchasing activities in one place – with the relevant requests arriving automatically at the right people to deal with them, and those approvals or rejections then fully integrated with the rest of the process?
Such a system is the key to keeping your purchasing team busy with cost-effective procurement, and not with time consuming and non-value-adding administration tasks. After the product has been delivered or the service received, invoices can be simply and effectively added to the system to ensure the finance department is not left with any questions. This level of optimization brings immediate structure and clarity, in turn leading to better co-operation and integration between employees and departments – not least between the people sourcing products and services, and the controllers looking after their budgets.
In part 2, we’ll look at the wins automated P2P can offer through greater efficiency, increased control and more detailed insight.